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October 20, 2020

Women and Retirement: Expectations Met or Missed?

By: Kerry Ely, Employee Education & Advice Specialist

As of late March 2020, studies show the number of Americans expressing confidence in their ability to live comfortably in retirement was at near-record highs. Since that time pandemic-related market flux may have changed the numbers. Because many surveys covering retirement are conducted only once a year with results released several months after the information is gathered, we won’t fully understand the impact on retirements for some time.

Still, the 30th Annual Retirement Confidence Survey conducted by the Employee Benefits Research Institute (EBRI) in early 2020 and discussed in their Issue Brief dated June 8, 2020, found women to have lower levels of retirement confidence than men.

Women face different challenges in saving.

While overall confidence was high, women expressed less confidence in their future retirement security than their male counterparts.  The challenges women face in preparing for retirement tend to be different than those of working men, the EBRI study says.  Often, women have lower average earnings and higher likelihoods of taking breaks from the workforce to handle family responsibilities, such as childcare and being caregivers to elderly parents. A similar study conducted by the Transamerica Center for Retirement Studies found 27% of women working part time (compared to 15% of men). While part-time employment can allow for greater flexibility for female professionals, it often comes with reduced pay and less likelihood of coverage by an employer-sponsored retirement plan.  Additionally, longer life expectancies leave women with more potential years in retirement, resulting in the need to have more saved and make funds last longer or work longer.

Differences also evident by marital status.

The EBRI study goes on to explore how the challenges women face are further segmented depending on their marital status. Among married working women, 76% said they are very or somewhat confident they will have enough money to retire comfortably. In comparison, just 43% of divorced women and 51% of never-married women expressed the same level of confidence. The disparity seems to also be due, at least in part, to lower levels of assets held by each group.  About 72% of divorced women reported less than $25,000 in retirement assets, compared to 31% of married women and 54% of never-married women.  Given the circumstances, it is easy to see where female retirement confidence could waver.

Financial and retirement planning could close the gap.

Women in differing situations could benefit from specialized resources that assist them with not only retirement planning, but every day financial issues as well. Women dealing with the financial fallout of a divorce or the death of a spouse may need particular attention. The data in Gallup’s State of the American Workplace report tells us – more than ever before in our history – that employees want employers to be their partners in wellbeing. Employers can help by establishing and encouraging participation in wellbeing or financial programs. These programs provide employees with access to financial professionals or coaches who can seek to understand their unique situations and apply thoughtful strategies to assist them.

Women should also take an active role to improve their retirement outlook and change the narrative. Some ways to start include:

  1. Educating yourself on planning and saving for retirement.
    Take advantage of employer resources, use online tools and calculators, learn or seek help on how to be appropriately invested, work with a financial advisor, or weigh the consequences of any decisions that affect your ability to save.
     
  2. Forming healthy financial habits.
    Strive to become a habitual saver, become closely involved with family finances, take inventory of your financial priorities, or create a budget or a financial plan.
     
  3. Using tax advantaged strategies.
    Participate in your employer-sponsored retirement plan, contribute to a Spousal Individual Retirement Account (IRA) if married and not earning a salary, review the Saver’s Credit for income eligibility, make catch-up contributions if you are over age 50, or review a Health Savings Account (HSA) plan if it is offered through your employer.

For More Information

Educating your employees and making a commitment to their overall financial wellbeing is incredibly important to help them achieve their financial goals – today and in the future. If you are interested in learning how you can enhance your benefits package to incorporate wellbeing, you can contact one of our specialists here.

 

CBIZ Retirement Plan Services is a trade name under which certain subsidiaries of CBIZ, Inc. (NYSE Listed: CBZ) market investment advisory, investment management, third party administration, actuarial and other retirement plan services. Investments, investment advisory and investment management services offered through CBIZ Financial Solutions, Inc., Member FINRA, SIPC and Registered Investment Adviser, dba CBIZ Retirement Plan Advisory Services. Investment advisory and investment management services may also be offered through CBIZ Investment Advisory Services, LLC, Registered Investment Adviser. Third party administration, actuarial and other consulting services offered through CBIZ Benefits & Insurance Services, Inc.

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